Establishment Of The European Works Councils

The importance of the subject matter for setting up a European Works Council (EWC hereafter) stems from the necessity to identify, evaluate and manage problems that come from the pragmatic aspect of employment relations. As Hoffmann and M ller (2001) note that the adoption of the EWC Directive in 1994 represented a turning point for EWC practice in which interested bodies saw EWCs as an institution to enhance trade union cooperation on a transnational level. However, less attention had been paid to the possibility of management using EWCs to its own ends (Hoffmann and M ller 2001).

In addition, the threats and opportunities caused by the diverse nature of employment relations and practice both on national and international level has made setting up EWCs important to look into bearing in mind also the legal implications involved as well. Therefore, this topic is important because of the priority given to organisations by the EWC directive on the flexibility to engage in negotiations (EWC Directive 2009/38/EC Article 13) between management and employee representatives on a European level for the benefit of improving employment relations.

Historical/Dynamics Background of EWC

A EWC is a body that represents employees and provides for the information and consultation of employees in Community-scale undertakings and Community-scale groups of undertakings as required by the 1994 EWC Directive (94/45/EC, Article 1.2). It is the first authentic European body of interest represented at enterprise level which has a status defined by law that cannot be avoided or dissolved by employers especially in most European countries. Although they are forbidden in law to organise industrial actions, they have legal rights to redress through courts when they consider their right has been violated.

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The emergence of the EWC is as a result of the need for organisations to respond to the Europeanization of business evolving from the Single European Market. The establishment of EWCs took place in successions as a result of legal changes made to the directive. Initially, the directive focused on a German influenced hard law type of employee participation administered by civil sanctions but aroused opposition which then initiated the shift to a soft law type of employee participation without a firm sanction (Falkner 1996). Although efforts to introduce EWCs in the 1970s proved unsuccessful due to the joint oppositions made by employer s organisations and the governments of member states, about 46 organisations mainly operated by French, German and Scandinavian countries voluntarily adopted the directives centred on the Vredeling directive between 1983 and 1994. The next event occurred between 1994 and 1996 when 386 companies adopted the Directive 94/45/EC to exploit the loophole that Article 13 created. Later, from 1997 to 2008, the establishment of newer EWCs reduced because of guidelines stated in article 6 of the Directive 94/45/EC which led to strictly employee representatives and trade unions (Ko hler and Begega 2010). Finally, In 2009 a recast Directive 2009/38/EC was made because of a legislative proposal put forward by the European commission to address a number of concerns spotted from observing the practice of the Directive in reality.

Also, the issue of Europeanization led to the changing aspects of EWCs. From, a mixed institution of employee and management representatives headed by an HR executive or member of the board of directors (French model) to only employee representatives as in the Continental European model (Ko hler and Begega 2010.

How EWCs are organised

EWC Directive requires business entities hiring more than 1,000 individuals in member states, of which 150 must be employed in each of two member states, should establish a European Works Council (EWC Directive 1994: Article 2) and this is mandatory for Multi-National Companies (MNC) under the European Union Law. Employees can elect work councillors or trade unions can nominate candidates according to procedures stipulated by the country s legislation.

EWCs in Practice

Telljohann (2005) points out that managers and trade unions have diverse interests, opinions and expectations. Lecher et al (2001), also emphasizes on the diverse nature of operations occurring within EWCs as an attribute to the organisations that manage them as well as the directive which covers them. Therefore, these factors represent, determine the development and differentiate the operationalization of EWCs enabling them obtain their structure from interactions with management, national employee representation, trade unions and also within the works council (Lecher et al 2001). However, the standard of relationship is defined by the degree of information and extent to which information is given coupled with the rate at which information is provided and the level of adequate consultation between EWCs and management.

EWCs and Management

Telljohann (2005) identifies four systematic plans of action taken by management in their dealings with EWCs. First of all, managers use a minimalist approach to conform to directives and avoid legal actions taken by employee representative. Secondly, managers apply a combination of manipulative and control approach in relating with EWCs to achieve their objectives. The downside of this approach is that it causes disunion between EWCs and makes them less important in the process of employment relations. Lastly, managers employ a constructive approach to propose improved or enhanced employee relations by offering to go outside the contents of the directive. The advantage of this type of approach is that both parties benefit in that managers demonstrate effective consulting process that is seen by worker representatives as a favourable time to influence management decisions. It can be argued that the mutual benefits achieved from a constructive approach make it an acceptable strategy for managers to relate with EWCs.

EWCs in practice: Management views and usage

In the process of internalising organisational activities and HRM practices on a transnational level, managers encounter difficulties that vary from restructuring organisations at European level to aligning employees objectives with the strategic objectives of the organisation along with sustaining a responsible autonomy at work at a national level. The extent to which management use EWCs in dealing with these difficulties depend on how they perceive EWCs in practice. Again, management perception differs from one organisation to the other in that some managers misconstrue EWCs as an avenue for sightseeing and are sceptical about increasing their importance (Vitols 2003). However, most managers appreciate the beneficial role EWCs play in communicating information to employees and consulting with managers effectively (ibid). It is beneficial because keeping employees well informed on management decisions enables them to clearly understand, accept and put a high value on management decisions. Managers in turn do not only win trust, acceptance and value for the decisions they make, they also gain respect. As a result, the tendency for managers to seek more strategic ways of enhancing the efficacy of EWC activities in the future is definite. Indeed, it is no surprise that management that fall under this category seem to be increasing in size (Vitols 2003).

Case Study: EWCs in Practice

According to a research carried out by Fulton (2005) on British Airways, it is evident that management adopted a minimalist approach in that although they tried to abide by the contents of the signed agreement, they limited information shared with employee representatives and were reluctant in entering into an open consultation with EWC. Also, based on the notion that management did not respect employee representatives, it is obvious that they also implemented a manipulative and control approach in relating with EWCs. These approaches in turn led to distrust between management and members of the EWC along with employees as a whole. Similarly, another example can be found in an Italian agro-food industry (Telljohann 2005) where management used a manipulative approach to show off itself to the public (corporate identity) and a control approach to limit the activities of the EWC.

EWCs and Trade Unions

In contrast to how management use EWCs, pluralistic unions tend to be more complicated in their dealings with EWCs. Trade unions interrelate with EWCs by appointing their international office or the collective bargaining department as delegates over the task of providing support to the EWCs. This approach helps Trade Unions facilitate the regulation of policies on a European level and enable the collective bargaining department concentrate on issues particular to its sector.

Another approach is the delegation of supporting task to national bodies or territorial bodies. Telljohann (2005) demonstrates that it is beneficial to choose territorial bodies because it strengthens the relationship between EWCs and Trade Unions. However, delegating support tasks using the above approaches can be problematic and because of the tendency for delegates to be partial in representing the unions placed in their care on international level or the inclination to follow EWCs of their own country on national level. Whatever the case may be, it is ironic to see that whilst the rationale behind this approach is to meet the demands of members of the EWC on organisational level as regards European policies, it ends up thwarting information and resources that is of value to the organisation and EWC activity.

Also, even though some unionists take up roles externally, complications occur when Trade Unions participate as full members in EWCs activities. For instance, pluralistic trade unions (e.g. French and Italian) assume that conflict in pursuit of the same entitlement as the other unions is inevitable and tend to replicate this approach within the EWC. As a result, full members of such pluralistic unions are likely to adamantly support this act of conflict thus causing problems when this approach is adopted as a controlling method of participating in activities within the EWC. Again rather than satisfying the objective of this strategy, it weakens the effectiveness of activities within the EWC and creates an atmosphere of confusion thus failing to meet the expectations of parties involved.

Typologies of EWCs

Lecher (2001) demonstrates four typologies of EWCs based on the divergent prospects, strategies and practices of actors, classifying them as symbolic, service, project oriented and participative. Differentiation between these typologies is made based on the analysis of interactions among the different actors such as management, trade unions, employee representatives and its internal capacity. While the symbolic typology ranks the least preferred, the participative typology is mostly admired because of its quality to exchange information and induce management to engage in negotiations. In fact, Lecher (2001) was right when he affirmed the constructive quality of a participative EWC.

Advantages of EWCs

According to Vitols (2003) the effectiveness of EWCs does not depend on whether the organisation is headquartered in a country with strong work councils and worker representation (e.g. Germany or Denmark) or weak tradition of partnership (e.g. France or UK). Although Streeck and Vitols (1995) and Marginson (2000) claimed that the effectiveness of EWC activities depended on the influence of strong work councils and worker representation in the home country, Terry (2003) builds on Vitols argument showing that organisations from weak tradition of partnership are hopeful about the future of stakeholder approach. Therefore it can be argued that so far as countries endeavour to improve the operations of their EWCs and apply lessons learnt from inaccuracies made in the past, the efficacy of their EWCs will continue to depend on their willingness to make things work.

Therefore, the opportunity EWCs create in improving employment relations through the exchange of information and the improvement of communication within companies gives companies a valuable reason to establish their EWC (European Foundation for the improvement of living and working conditions 2008). All the same, Vitols (2003) highlights specific benefits of EWCs on a European level which demonstrate that:

Employees appreciate the policies and vision of the organisation and managers are well furnished with useful information which helps them make better decisions.

Developments at national levels are well understood and specific. Also, communication channels are clear and effective and representatives identify their operations as being international in scope.

It enhances the spirit of teamwork and strengthens social relationships through interacting across borders and builds trust between central management and representatives at national level.

Representatives based in countries with weak tradition of partnership are able to bring into operation the stakeholder approach while top management are conversant with the issues surrounding social responsibility and Human resource management.

To this end, it is evident that the objective of the EWC Directive to improve employment relations succeeded in several areas.

Disadvantages of EWC

The genesis of the hindrances in establishing a EWC stems from the adjustable and vague nature of the directive. To begin with, the loose guidelines of the directive expose it to exploitations from a management representative level and reverse the objective of the directive to curb management-seeking interests. Also, as a result of its nature, it paves way for a bureaucratic setting leaving companies lose focus on their objective and benefits of the directive. Moreover, such a directive sets confusion in the organisation of activities amongst participants (Lucio and Weston (2000).

According to Waddington (2011) the politics of labour representation and the possibility of managers to exploit the guidelines set in the Directive for their own self-interest can hamper establishment of EWCs. Managers defend their resistance underlining the cost of setting up EWCS, the impact on company decision making of EWCs and the transparency that may result from a EWC (ibid). For instance, the confusion on appropriate timing to involve the EWC in decision making with too early and too late dilemmas involved.

In addition, transnational organisations incur huge costs in setting up EWC meetings through administrative costs such as travel and accommodation, feeding, preparation and organisation of meetings, real-time translation services, and remunerations for delegates and managers.

More so, some managers claim that setting up a EWC will prolong the process of decision making (Waddington 2011). On the contrary, Vitols (2003: 2006) indicated that managers in companies that have established EWC do not subscribe to that view. To that end, it could be argued that managers see EWCs as instruments that diminish their powers and so they use the excuse of bureaucracy to manoeuvre their way into resisting the necessity to establish a EWC and fulfil their selfish interest.

Besides, some managers also claim that EWCs will make known the employment conditions of the organisation and pave way to possible matters on collective bargaining (Waddington 2011; Whittall et al. 2008). Again, this is a tactic used by managers to strategically meet their needs at the detriment of employees as regards to improving employment relations. The EWC directive is meant to improve relations based on information and consultation and not to force decisions from actors and so it is not a valid excuse to reject requests made by employees to establish EWC because managers are too myopic to see the benefits it brings.

Furthermore, differences in language, culture, behaviour, traditions, industrial relations and legal systems caused problems the diversity in structure and Human resources of EWCs. What is more is the lack of understanding of business terms, balance sheets, etc. by many delegates and reluctance of some delegates to take responsibility for decisions or points of view.

Problems with EWC

From a trade union perspective, EWCs are vehicles for competition between industrial sites in that union representatives exploit the opportunity for exchanging information selfishly. The information obtained is used strategically by union representatives to strengthen the position of their own site while ignoring the requests or concerns of their branches. Therefore it can be argued that the gap in the directive to provide a legal context to avoid such competition in employment relations gives room for the misuse of its activity hence producing a corrupt inter-industry competition effect. Consequently, this argument does not agree with shifting the blame onto the union representatives as Hanck (2000) reasons in a study of the automobile industry.

On the other hand, management see EWCs as an instrument to align organisational change projects with decision making instead of concentrating on concerns pertaining to employment relations. e.g. as in the automobile industry Hanck 2000. Although one can argue that this is because of the weakness of the directive as pertaining to the inevitable issues of organisational restructuring, Miller and Platzer (2003) point out that the absence of an in-depth and specific directive and EWC agreements does not make it weak rather the practical functioning of EWCs determines its efficiency. Therefore, it can be argued that regardless of how loose the directive is, management representatives should align relations issues with structural changes and seek the cooperation of worker representatives on decisions that will benefit all parties.

HR Challenges

From the above analysis, it is apparent that HR managers are likely to face some challenges. These include but are not limited to;

the establishment of a well-integrated organisational culture

one employee voice

aligning employee objectives and values with that of the organisation

ensuring that employees understand and are regularly updated with the strategies and objectives if the organisation

Making a strategic choice between converging HR policies or diverging them with a focus on national backgrounds and as well as widespread

Stimulating movement across national borders while cultivating the spirit of cooperation.

Also, since dealing with employee relations would require ethical considerations based on corporate responsibility and sustainability, it is the responsibility of HR Mangers to ensure that both the organisation and its employees are well protected.

Recommendation and conclusion:

Majority of the problems linked with setting up EWCs is as a result of lack of training. To this end, in order to reduce language barrier and considering the fact that English is widely used by many countries and an official language, representatives on all sides should seek training to boost their fluency in English. Also, in order to get acquainted with business terms and instruments, delegates should also undergo training this will in turn prepare them to participate effectively and take responsibility for valuable decisions.

Furthermore the problem of distinctions in culture, behaviour, traditions, industrial relations and legal systems can be addressed by encouraging meetings to be held outside the home country at other times. This will help delegates familiarise themselves with the norms and values of other nations. It will also create an avenue to improve employment relations between companies, although this may imply a convergence in HR issues as regards industrial relations. In so far as this improves the situation, management should utilise it as a means to achieve the aim of the directive.